Week In Review

State Capitol Week in Review

            LITTLE ROCK – When the 90^th General Assembly of the Arkansas legislature officially convenes at the state Capitol, it will be noted for the historic changes in leadership of state government.

            However, the new leaders of Arkansas will face many old, familiar challenges. They will have to vote on ways to pay for improvements to school facilities and methods of efficiently operating prisons. 

Legislators must write a balanced budget for state government, which means that they must make difficult choices and balance competing interests. Fiscal policy in Arkansas has always been very conservative and no one expects any change during the 2015 regular session.

The new governor has said publicly that he hopes one of the first major issues to be decided is his proposal to reduce state income taxes on the middle class by about $100 million a year. The extent of his success will influence all the legislature’s other fiscal decisions.

            There will be close votes, vigorous debate and controversy. That’s the nature of our political system. The old, familiar challenges will divide the legislature along old and familiar fault lines. For example, legislators will have different opinions on how best to distribute funding for school buses, and their final decision will help determine bus routes and schedules.

            The Arkansas legislature is not full-time. Lawmakers have jobs outside the Capitol, or they are retired from jobs outside the Capitol, and their professional careers shape their opinions on government policy. 

Lawmakers have differences of opinion in business as well as political issues. Some of the most heated controversies at the Capitol have involved health care, insurance, manufacturing, banking and finance. 

Physician groups have opposed health insurance companies, while the interests of pharmaceutical manufacturers have conflicted with those of hospitals. Banks, investment firms and insurance companies have clashed over the right to sell specialized financial vehicles. Attorneys have gone against business organizations, and manufacturing companies lobbied against what they perceive as preferential regulations enjoyed by competing manufacturers.

In other words, the disputes at the Capitol are not always between liberal and conservative, labor and management, Democrat and Republican.

            Other issues before the legislature include restructuring lottery scholarships to maintain the long-term financial health of the system. Legislators have been working on plans to expand broad band access in public schools and advanced classes in computer science and information technology.

Revenue Report

            The state fiscal year is half over and net general revenue is up 3.3 percent over the same six-month period last year. According to budget officials, revenue is closely tracking projections and is 1.7 percent above their forecast.

            So far this fiscal year the state has collected about $2.6 billion in net general revenue. That is $83.4 million more than last year.

            Revenue collections are a fairly accurate indicator of the state’s economic health. Revenue from the sales tax and the individual income tax were below forecast, but revenue from the corporate income tax was above initial predictions.

            For just the month of December, net available general revenue was $482.8 million, which was $10.7 million or 2.3% above December last year.